4A-G revision Flashcards
Business change definition
Business change is any planned or unplanned alteration to business processes and procedures because of pressures inside or outside the business.
Business environments that may influence change
Internal environment Operating environment (suppliers and customers) Macro environment (government, economy)
Changes in business can be either:
Reactive
Proactive
What is proactive management?
Refers to when careful considerations have been made about what the business is facing in the future and processes are set in place to manage anticipated events/possibilities.
What is reactive management?
Refers to when decisions are made as quickly as needed as a result of an unanticipated situation occurring.
Key Performance Indicators definition
Refers to the criteria that measure how efficient and effective a business is at achieving objectives
What are the 9 KPI’s?
Level of staff turnover Percentage of market share Rate of productivity Number of sales Level of staff absenteeism Level of waste Number of customer complaints Number of workplace accidents Net profit figures
What do KPI’s do?
Establish business objectives
Develop and implement strategies
Evaluate performance
What is the purpose of KPI’s?
KPI’s are used to evaluate how successful a change made in a business has been according to the business’s objectives.
Identify need for change by
Finding the problem
Looking at the options available
The strength of those options
The potential result of those options
Percentage of market share definition
Percentage of market share highlights how well a business is performing within their industry by looking at the proportion of total sales in a specific industry.
How can percentage of market share evaluate performance?
Percentage of market share indicates how well a business is performing in comparison to their competitors. The greater market share, the greater sales a business has compared to their competitors.
Net profit figures defintion
Net profit figures is the amount of money left over once a business has deducted total costs from revenue.
How can net profit figures evaluate performance?
Net profit figures allows a business to see how well they are performing financially and if revenue is too low or if costs are too high.
Rate of productivity growth definition
Rate of productivity growth is a measure of the increase in output per input over a period of time.
How can rate of productivity growth evaluate performance.
Rate of productivity growth indicates how efficient a business’s operations system are and therefore allows the business to see if they are improving in performance or not.
Number of sales definition
Number of sales refers to the amount of goods and services sold by a business within a specific period of time.
How can number of sales evaluate performance?
Number of sales can determine customer satisfaction levels, as an increase in sales will mean customers like the product.
Rates of absenteeism definition
Rates of staff absenteeism refers to an employee’s ratio of non-present days to work days during a given period of time.
How can rates of absenteeism evaluate performance?
Rates of staff absenteeism can determine the levels of staff morale and overall how satisfied employees are with working conditions.
Level of staff turnover definition
Measures the number of staff who leave a business and are replaced by new employees over a time period.
How can level of staff turnover evaluate performance?
Determines levels of staff morale
Levels of wastage definition
Level of wastage measures the amount of waste the business produces through their activities and processes.
How can levels of wastage evaluate performance?
Levels of wastage indicates how significant environmental and economic problems are for the business and if that is affecting overall performance.
Number of customer complaints definition
Measures the number of customers telling the business they are dissatisfied.
How can number of customer complaints evaluate performance?
Indicates levels of customer dissatisfaction, which is something that affects sales, profit and reputation of the business, so varying levels will indicate how the business is performing.
Number of workplace accidents definition
Measures the number of workplace accidents that occur in a business over a period of time.
How can number of workplace accidents evaluate performance?
It reflects the safety of the workplace and measures the productivity the business is, as accidents cause disruptions to work and that affects performance.
Force field analysis definition
Force field analysis is a model that determines if businesses should proceed with a proposed change. The model identifies and examines factors which either drive or restrain a movement from being successful.
Force field analysis process
- Identify need for change
- Identify driving forces
- Identify restraining forces
- Assign scores
- Analyse and apply
Advantages of force field analysis
Businesses can accurately examine if a proposed change will be successful
Businesses can potentially save time by promoting the main driving forces and limiting restraining forces
Business can save money by only deciding to implement change where success is likely
Disadvantages of force field analysis
Employees may be unhappy with change
Can be a time consuming process, especially if change must occur regardless
Types of change in business
Incremental change
Radical change
Disruptive change
Incremental change definition
Incremental change are the many small changes made by a business day to day as management respond to opportunities and threats.
Radical change defintion
Radical change are large dramatic changes management make which often involves significant alteration of business activities.
Disruptive changes definition
Disruptive changes are a type of change that arises from changes in the external environment (suppliers, customers, government etc.)
Internal causes of change
Restructuring
De-layering
Management decisions
Expansion
External causes of change
Social trends/attitudes
Economic conditions
Laws and regulations
Technological advances
Detailed explanation of using the force field analysis
The first step of the force field analysis is for the business to identify the need for change. This involves determining what a business has to alter to achieve its objectives. This would be a result of pressure from internal and external components in its environment. The business would then need to identify driving forces that promote change and also restraining forces that resist changes. The business would then need to assign scores to each factor to determine their strength and effect on proposed changed. Lastly, the business would need to apply strategies to further promote driving factors and minimise restraining forces.
Driving forces defintion
Driving forces are the factors within or outside the business that promote change.
Restraining forces definition
Restraining forces are the internal and external factors that resist a business change or actively try to stop change.
Internal driving forces
Managers
Employees
Pursuit of profit
Reduction of costs
External driving forces
Competitors Legislation Globalisation Technology Innovation Societal attitudes
How do managers drive change?
Managers drive change when changes help the business fulfil objectives, as better performance will improve their job security and finance.
How do employees drive change?
Employees drive change when change improves their working conditions.
How does pursuit of profit drive change?
Drives change if the potential for an increase in profit is there with change.
How does reduction in costs drive change?
Reduction in costs drives change if change improves efficiency and effectiveness of operations.
How do competitors drive change?
Competitors drive change as the business needs to adapt to stay ahead of competition so they can remain competitive and successful in their industry, so changing to keep up with them is something that can happen.
How does legislation drive change?
Legislation drives change as it may force a business to change aspects of itself to ensure their production is legal, as failing to do so can result in fines or suspension of operation.
How does globalisation drive change?
Globalisation drives change as it increases the competition businesses face, so a business will need to change to find more efficient ways to operate to remain competitive.
How does technology drive change?
Technology drives change as technology is always progressing, so for a business to stay up to date and relevant, they should always be changing with technology, therefore making it a driving force.
How does societal attitudes drive change?
Societal attitudes drive change as businesses need to remain favourable to the public to remain competitive.
How does innovation drive change?
Drives change as being able to improve a product through change is something a business will always want to do.
Globalisation definition
Refers to the process of increasing trade between countries and economies.
Innovation def
Refers to the introduction of new things or methods into a business such as an improve product or process or entirely new design of something.
Societal attitudes defintion
Refers to the collective values, beliefs and views of the general public.
Restraining forces
Managers Employees Time Organisational inertia Legislation Financial considerations
How do managers restrain change?
Managers may resist change if it threatens their position, or if change is not something they support.
How do employees restrain change?
Employees may resist change if it affects their job security or if the outcome is uncertain.
How does time restrain change?
Time can prevent change from occurring if time restrictions prevent proper implementation of a change a business wishes to introduce.
Organisational inertia definition
Refers to the tendency for a business to remain in their established ways of operating.
How does organisational inertia restrain change?
Business that are stable with little change over time may become more likely to resist change as they are used to their traditional ways and may not feel it is necessary to make adjustment.
How does legislation resist change?
Legislation can resist change as laws may prevent a business from implementing a change.
How does financial considerations resist change?
Financial considerations resist change as a business may lack the monetary resources to implement a beneficial change.
What are Porter’s generic strategies?
Lower cost strategy
Differentiation strategy
What is a competitive scope?
The size of the business’s target market in its industry
What is a competitive advantage?
A condition that puts a business in a superior position
Describe the lower cost strategy
Refers to a business offering a comparable product for cheaper than the competition in order to gain a competitive advantage.
Describe the differentiation strategy
Refers to a business offering a service or product that is perceived as unique or superior to its competition, allowing for a competitive advantage.
What is the difference between cost leadership and cost focus?
Cost leadership is when a business sets out to be the low cost producer of all products, like an Amazon type company, whereas cost focus is when a business sets out to be the low cost producer for a specific industry, like Cadbury with chocolate.
Advantages of lower cost strategy
Attracts cost-conscious customers
Creates a barrier to entry for new competitors as it would be challenging for them to match lower prices and costs and still remain profitable.
Business operations are optimised
Disadvantages of lower cost strategy
Standardized products may not meet needs of customers with specific needs.
Customers won’t be brand loyal
Customers could view a cheap product as low quality.
Advantages of differentiation strategy
Customers are more loyal
Employees may feel increased sense of pride
Quicker sales
Business can charge premium prices and customers will still purchase.
Disadvantages of differentiation strategy
Difficult to prevent another business replicating their point of difference
New employees may require additional training which is more time consuming
Higher selling prices may deter customers
Similarities between lower cost and differentiation
Both increase a business’s profitability by providing a competitive advantage
Differences between lower cost and differentiation
Lower cost sells products at similar or lower prices compared to competitors whereas differentiation sells at higher, premium prices
Lower cost targets cost-conscious customers, differentiation targets customers that are not price sensitive
Lower cost has an internal focus on operations whereas differentiation has an external focus on meeting customer needs.
Driving forces impacting Australia Post
Globalisation - Breaking down of commercial borders around the world.
Technology - Improved eCommerce platforms making shopping from home
easier.
Innovation - Innovative marketing and retail platforms and services.
Societal Attitudes - Consumers demand access to commercial goods 24/7.
Legislation - Social distancing required in Australia Post distribution centres.
Restraining forces impacting Australia Post
Employees - Require retraining and redeployment.
Time
Organisational inertia - Australia post is a GBE with a complex organisation structure. Change in such a large organisation is difficult.
Legislation - AusPost is governed by the Australian Postal Corporation Act 1989 so they have to follow thier guidelines, restricting changes.
Financial - Australia Post is self-funded.
Changes to Australia Post
Redeployed workers to its StarTrack services
Increased freighter flights
Retrained motorbike posties
